Libor Changes: NONE
The BBA does the RIGHT thing: NOTHING
The group that oversees the London interbank offered rate will implement no changes to the way the measure is set, confounding critics who said it has become unreliable as a gauge of the cost of borrowing.
“The committee will be strengthening the oversight of BBA Libor,” the association said in a statement Friday. The composition of the bank panels that contribute rates were left unchanged, it added.
The British Bankers Association, an unregulated trade group, has been under pressure to overhaul the 24-year-old system after the Bank for International Settlements said in a March report that some members had understated their rates to avoid being perceived as having difficulty raising financing.
Related:
Waiting for the BBA verdict
ADD 14:35 EST
Bloomberg: BBA Avoids Changes to Libor, Seeks to Bolster Review
“The BBA didn’t do anything; they don’t want to shake the boat,” said Stan Jonas, who trades interest-rate derivatives at Axiom Management Partners LLC in New York. “Any change that they make will damage the interest of their members, and the banks are the members.”
“You can’t change the rate completely,” Kornelius Purps, a fixed-income strategist at UniCredit SpA in Munich, said in a Bloomberg Television interview before today’s announcement. “It would be like changing how crude oil is being refined and then having no car in the world that can drive on it.”